Livestock Export

A Sector misunderstood by Policy Makers

Ethiopia is the leading country in Africa in terms of livestock population with more than 60 million cattle, 30 million sheep, 30 million goats and over 1.5 million camels. Livestock contributes over 15Pct of Ethiopia’s GDP and 45Pct of the agricultural GDP. In Ethiopia, livestock is a tractor for crop farming, source of cash income for millions, insurance for uncertainties, fertilizer for crops, expression of status for families, store of asset, and source of foreign currency for the country. However, in recent years, the livestock resource is depleting, the price of animal byproducts is rising, and the foreign currency generated from this sector is dwindling, reaching less than USD50 million in 2018, down from more than USD200 million in 2012. This is despite Ethiopia targeting generating USD1 billion by the end of the second GTP from livestock and meat exports.

This trend is in contrast to neighboring countries’ performance in the sector. Somalia and Sudan, which have less livestock than Ethiopia, are generating more than USD500 million and USD760 million, respectively, according to World Bank reports.

Over 1.5 million exportable livestock are smuggled out of Ethiopia to neighboring countries annually, through borders, according to assessments by the Ethiopian Meat and Dairy Industry Development Institute.

Policy makers in Ethiopia believe illegal cross border trade remains the main challenge of the livestock sector, especially livestock export. With this logic, the government tried employing different efforts to curb the problem but ended up worsening the problem.

However, Ethiopian policy makers missed the major problem for the dwindling performance. The development of monopolistic quarantine facility operators in Djibouti and Somalia is the main challenge for the low performance of livestock and meat exports in Ethiopia.

Quarantine in livestock trade connotes a facility used to keep livestock separated from others before they are exported. Animals including cattle, goats, sheep, and camels get quarantined to be checked of any transmittable disease which can affect human and animal health, get treatment for any disease found, and are conditioned for export.

Middle East countries who are the main buyers of livestock from the Horn of Africa take all prerequisite measures before they let livestock enter their country. This makes having a certified quarantine facility very important. The winning exporter is then the one who can develop modern quarantine facilities and make sure importing nations get a properly treated animal from the quarantine sites. Ethiopia owns the numbers, but neighboring countries own the livestock.

Having a certified facility opens doors for livestock export. But the task is not simple. From constructing the facility based on standards of the importing country to negotiating for approval, is a difficult job. Especially for Ethiopia, it has proven to be very difficult. Ethiopia failed to develop quarantine facilities which fulfil international standards and has thus resulted in poor exports.

Ethiopian exporters forced to use quarantine facilities in Djibouti and Somalia for their exports found it a difficult and repetitive process. Exporters from Ethiopia condition the animal from 7 to 30 days based on requirements of the importer and get a quarantine clearance in Ethiopia. This certificate will only serve the exporter only until the animals enter into another quarantine facility in Djibouti or Somalia. From there, the animals will be conditioned again and the certificate from Ethiopia will be changed to a Djiboutian or Somalian quarantine certificate to be exported to Middle East nations. This costly and time-consuming process slaughtered the competitiveness of Ethiopian exporters and pushed the trade into informal channels.

Surprisingly Somalia, which is struggling to have a properly functioning government, seized the opportunity and set up modern quarantine facilities by inviting investors from the Middle East to develop and operate giant quarantine facilities. By doing so, Somalia, and similarly Djibouti, became the exit door for livestock pooled in from around East Africa.

In 2015, Somalia exported a record 5.3 million animals through quarantine facilities in Berbera and Bossaso and generated USD400 million in the process. From this export, around 75Pct of the livestock came from Ethiopia through illegal cross border trade channels, according to a World Bank report. Ethiopia has a livestock population larger than any country in the Horn of Africa but gets a very small fraction of the revenue.

The problem for Ethiopia is not informal cross border livestock trade. This is only the consequence of underlying factors always overlooked by policy makers. The main problem that needs to be addressed is the one that pushed pastoralists and traders into informal cross border trade—lack of predictable market access in the Middle East. On the other hand, exporters from Somalia and Djibouti, as well as Sudan, developed a predictable market in the Middle East by virtue of having qualified quarantine centers. This makes cross border trade profitable for traders in the region to collect livestock from Ethiopia and re-export to the Middle East.

This makes controlling illegal cross border livestock trade difficult and hurtful for Ethiopian pastoralists. This trade creates a predictable market for pastoralists and contributes foreign currency the economy, at least informally. The informal trade contributes significant amounts of dollars for Ethiopia and it is the main predictable market access for the pastoralist community whose lives are dependent upon their livestock.

The problem is that we are getting a fraction of the potential income we could have generated from livestock exports and it is a threat to the livestock sector development. For example, exporters from Somalia come with USD600 and exchange in the black market. That will be enough to buy the biggest bull in the market and cover transportation expenses. They condition the animal in a quarantine facility in Berbera for 14 days and sell it to the Middle Eastern market for more than USD1200. Ethiopian pastoralists who have kept and raised the animal for years generate less than the exporter who conditioned the animal only for weeks.

This trend is costing the economy in terms of lost foreign currency, generally dragging the sector down, and draining the supply of livestock for meat exporters.

Because the government has overlooked the root cause, it is investing a lot of time and effort to control the cross-border trade which has proven to be difficult.

This calls for action to address the main issue for the problem which is creating a predictable market access in the Middle East, only possible through developing certified quarantine facilities. The government started the construction of quarantine facilities in Mille and Jigjiga in 2010. However, after many years of construction, the facilities are yet to start operations. This is related to the low attention policy makers give to the role of such sites.

In addition to delays, the biggest of the facilities being developed around Mille is being constructed where there are severe water and feed shortages. This makes the operability of the facility questionable, even if they are finalized.

Even after they become operational, another challenge is the monopoly of quarantine facilities in the Horn of Africa. Quarantine operations in the region are controlled by an oligopoly of few firms and individuals who also have a long hand in opening and closing market access to Gulf countries. Since it is a very big business for them, they block any livestock exported from facilities other than their own. This complicates the task on the ground and calls for a big commitment and effort from the government.

The way forward
The livestock resource of the country is becoming a source of wealth for contrabandists and neighboring countries and a source of despair for more than 5 million pastoralists in the country who are becoming poorer year after year. To change this narrative, the stakeholders, especially the Ethiopian government, should first deeply understand the livestock sector and the market’s dynamism, and organize an independent Livestock and Pastoralist Affairs Ministry.

The monopoly of livestock export from the Horn, mainly dependent upon livestock sourced from Ethiopia and dominated by few individuals, should be broken at any cost. Ethiopian embassies in the Gulf countries should understand that we have a big potential to expand our livestock export to the Gulf and work hard to secure market access for Ethiopian traders.

The situation of being a land-locked country is a contributing factor for the problem. So, if it is difficult to break the monopolies in Djibouti and Somalia, we need to take action and use other channels like Assab. Otherwise, the futurity of Ethiopian pastoralists and the livestock sector, remains just a milk cow for exporters in neighboring countries.


9th Year • Nov 16 – Dec 15 2020 • No. 92

Sewagegnehu Dagne

s a personal banker at Zemen Bank. He can be reached at Sewagegnehu.Dagne@zemenbank.com


Leave a Reply

Your email address will not be published. Required fields are marked *


About us

Ethiopian Business Review is first class and high quality monthly business magazine.


CONTACT US

CALL US ANYTIME



Newsletter





This site is protected by wp-copyrightpro.com